MHI Licenses 3rd Chinese Company

February 23, 2010

Mitsubishi Heavy Industries, Ltd. (MHI) and Zhejiang Yungpu Heavy Machinery Co., Ltd. (YUNGPU) in China's Zhejiang Province agreed last December on licensing of the technology incorporated into the Mitsubishi-UE, MHI's low-speed marine diesel engines. The licensing became effective late last month. YUNGPU is the third Chinese company to be licensed Mitsubishi-UE engine technology. YUNGPU plans to complete manufacture and delivery of the first unit by the end of this year.

The engines licensed to YUNGPU are the UEC37LSII and UEC33LSII, small-size marine diesels with cylinder bores of 370 and 330 millimeters (mm), respectively. Under the licensing agreement YUNGPU can manufacture, sell and provide after-sale services for engines in China.

YUNGPU was established in 2008 in Ningbo, Zhejiang, to manufacture and market low-speed marine engines. The company is currently constructing a plant with an annual production capacity of 120 engines, approximately 1,000,000 horsepower in total, slated for completion in this summer. Once production gets under way, the number of employees will be increased to 550.

Conventionally medium-speed diesel engines have often been used as the main engines of 5,000 to 20,000 deadweight tonnage class bulk carriers. YUNGPU targets manufacturing and marketing fuel-efficient, easy-to-maintain low-speed engines for this category, and this was its incentive behind asking MHI to license its technology.

Mitsubishi(MBI.F)-UE is one of three major brands in the global market for marine diesel engines, along with MAN and Wärtsilä. UE engines feature compact size, outstanding operating efficiency and environmental compatibility, such as low-fuel consumption and fewer cylinder lubrication oil rquirement. They are available in a wide range of models to accommodate diverse power output needs.

MHI has previously licensed UE engine technology to two other Chinese companies: large-size UE engines to Qingdao Qiyao Wärtsilä MHI Linshan Marine Diesel Company Ltd. (QMD)*1 and small-and medium size engines to Yichang Marine Diesel Engine Plant (YMD)*2. With the addition of the new licensing arrangement for small-size UE engines, a dynamic structure will now be established offering a broad range of UE engines to the Chinese market. Boosted by this development, MHI looks to pursue further penetration of its Mitsubishi-UE brand into the global market.

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